Question: Revenues Less: Variable cost Contribution margin Less: Fixed cost EBIT Less: Interest charges EBT Less: Taxes (40%] Earnings after tax Dividends (25%] Addition to retained

Revenues Less: Variable cost Contribution margin Less: Fixed cost EBIT Less: Interest charges EBT Less: Taxes (40%] Earnings after tax Dividends (25%] Addition to retained earnings Firm A Firm B 850,000 25,000,000 125,000 11,000,000 725,000 14,000,000 120,000 2,100,000 605,000 11,900,000 75,000 720,000 530,000 11,180,000 212,000 4,472,000 318,000 6,708,000 79,500 1,677,000 238,500 5,031,000

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